CEPAL Review - Volume 1995, Issue 56, 1995

First of all, I should like to say how grateful I am for the kindness with which I have been received everywhere I have been in Chile. Nevertheless, ECLAC has a very special meaning for me. I am perhaps a little conservative in my habits, although not so much in my way of thinking, as Enzo Faletto seems to think …

This article presents the issue in the context of the theoretical and empirical debate, started by Kuznets, on the possibility of achieving growth with equity. The conclusion is that there is no inevitable conflict between these two goals, provided that economic policy promotes the areas of complementarity between growth and equity. It therefore rejects the approaches which assume that there is an insoluble conflict between these objectives, such as the “trickle-down” theory (which stoically accepts that such a conflict exists and proposes that those affected should wait as long as is necessary for their situation to improve) and the contrasting “parallel” approach (which suggests that growth should be sacrificed in favour of equity, with social policy being entrusted with the correction of the worst distributive effects of economic policy).

The recent economic development of the region confirms that stability has not yet been firmly consolidated in it. There are still some structural factors of macroeconomic instability, various sequels of the debt crisis have not yet been overcome, and fresh macroeconomic tensions of various origins have made their appearance. The challenge currently facing economic policy is to implement reform and growth policies while maintaining the recent achievements in terms of stability. A prior requisite for this is a proper understanding of the way macroeconomic and microeconomic factors interact: the mutual influence of constraints in terms of macroeconomic consistency, on the one hand, and the imbalances generated in the reform process and the consequent changes in the production base, on the other.

When reforming pension systems, the arguments used must be carefully studied, since changes may involve substantial economic, social and political costs. The reforms which are being carried out in the region reflect this dilemma and are the result of various compromises affecting the new system as regards: i) the degree to which the benefits provided by the system and the administration of its reserve funds are isolated from the political process; ii) the necessary regulation and supervision of the markets with which the system interacts in order to effect the financial intermediation of its funds; iii) the appropriate combination of fiscal resources and pension fund surpluses to be used to pay the debt owed to pensioners of the former system and the commitments in terms of minimum pensions; iv) the provision of insurance schemes against disability and survival contingencies and possible fluctuations in the financial market, as well as covering the lifetime annuity option; v) the need to supply information so that members can take free and informed individual decisions, and vi) ensuring a capital market with a suitable combination of financial instruments to protect the system against inflation risks.

Among the East and Southeast Asian economies often regarded as the most successful showcases, the People’s Republic of China (PRC) occupies an outstanding place. This economy has one of the fastest growing GNPs in the world, and its outward orientation in the post-Mao Zedong era has made the country a significant world trade partner, so that the question of whether or not the economy stays on its sustained growth path will affect the welfare of the world economy in its entirety, including Latin America. The deepening of the ongoing economic reforms, coupled with prudent macro policies, should insure that the PRC’s economy does indeed stay on course in its sustained, yet gradual, transformation process. Despite the already eminent position that the country occupies on the present world scene and its high growth prospects, present economic ties between the PRC and Latin America are marginal: mutual trade flows and reciprocal investments remain at an extremely low level.

This study examines “South-South” economic relations in the context of regionalism. It covers three Latin American countries and eight high-performing Asian developing economics. Although the level of trade and investment between these two groups is currently very low, trade is growing fast and there are indications that the potential for continued growth exists. Although regionalism is advancing in both these parts of the world, it has so far not affected the ties between the two groups of countries, and in fact inter-regional trade growth has recently been exceeding intra-regional growth in the case of most of the countries covered by this study. In the short term, it would appear that economic relations between these Latin American and Asian countries will depend largely on whether a “second generation” of reforms in Latin America will sustain the gains from prior reforms.

Two opposing trends are currently shaping relations between the European Union and Latin America. On the one hand, political signals in both regions are positive and point the way to closer ties in the future; on the other hand, the situation with regard to the Union’s trade with Latin America has worsened appreciably, with the region’s trade surplus giving way to a deficit for the first time in four decades. This trend may jeopardize the progress made thus far. If we do not act now, trade-related tensions, the reduction of development assistance and the appearance of social or environmental trade restrictions may cast a shadow over the bilateral situation, causing the two regions to become what we might describe as distant friends.

As a subject of international negotiations, rules of origin have been of interest since the early 1970s, but in recent years they have come to be regarded as a new form of protectionism and have figured prominently in the spate of trade negotiations which have been initiated or carried forward in the Americas since the late 1980s. The trade schemes negotiated under the terms of the new treaties thus adopted make it possible to extend the protection of intermediate inputs from one signatory country to another. Therefore, the advantages associated with a free trade area are no longer determined solely by each country’s system of protection but have instead come to depend upon their trading partners having low trade barriers as well. Moreover, any country gaining access to a trading partner’s market must “share the preference” with the party benefiting from the rules of origin in the other country.

This article analyses the main manifestations of the globalization process and its implications in terms of the restructuring of energy markets. The reforms now being undertaken by the countries of the region are being pursued within the context of an economic paradigm with ramifications at the international level which assigns high priority to the liberalization and/or privatization of public utilities, and this, in turn, can be expected to engender new savings/investment strategies based on the relatively more stable nature of income flows from energy activities.

Competitiveness has become one of the main “standards” governing the ever-changing interplay of interests at the international level. Trade liberalization, structural adjustments, the retooling of production, intelligent coexistence with our natural resources, the struggle to eliminate poverty -all are viewed, in one way or another, through the prism of competitiveness. This has transformed competitiveness into some sort of compulsory principle by which international status is measured and which influences the formulation and implementation of business strategies and national policies. The literature on competitiveness offers a wide array of definitions, ranging from ones that focus on economic aspects to others that attempt to link up the techno-economic, sociopolitical and cultural aspects of the competitive process.

Latin America has kept in step with the worldwide trend towards the privatization of public utilities. Its motivation for doing so stems from a number of factors: an economic philosophy, its quest for greater efficiency, macroeconomic situations, debt-equity swaps, decisions to bring private capital into the management of public utilities during times of economic crisis, and others. This article analyses the characteristics and components of public utilities, the differences existing between one utility and another (particularly in terms of their capital/revenue ratio), the rigidity of supply and investment, the possibilities of giving consumers a choice, the concept of economies of scale and how it ties in with the notion of monopolies, and the legal implications of monopolistic systems.

The technology employed by Latin America’s educational systems was developed by the countries which are now industrialized. This technology is labour-intensive, with expenditures being concentrated in the salaries of teaching staff and administrative personnel, and its effective utilization -as it is applied in the industrialized countries-entails a high level of expenditure per student. In line with recommendations made by international agencies, many Governments in the region have voiced their intention to raise the amount they spend on education to between 6% and 8% of the gross domestic product.

Social policies aimed at reducing inequalities in the labour market need to be founded upon a solid understanding of the factors that generate disadvantageous conditions for specific segments of that market. This article describes inequalities in the occupational and income structure affecting economically active women and, in particular, economically active women migrants in Santiago, Chile, and provides some insights into the reasons why these disadvantages exist. Chile’s economic growth process is seen by some as setting an example for other Latin American countries which are opening up their economies to international markets. Steps have to be taken, however, to prevent still greater concentration of wealth, the persistence of high levels of poverty, an increase in the heterogeneity of the labour market and inequalities in wage levels.